The Obama administration is hinting at some of the job-creation plans that the president plans to announce in a speech next month. Although the administration had promised “a very specific plan to boost the economy, to create jobs and to control our deficit,” Philip Klein notes, it is now gesturing at merely an “outline” of possible actions.
According to the Wall Street Journal, the outline will include three parts, all intended to ease the long-term unemployed back into work. The first is a measure based on an unemployment program in george called Georgia Work$, which uses unemployment insurance funds to pay unemployed people to train for work at businesses. The other two ideas are more infrastructure spending and tax incentives for firms that hire new workers.
Taken together, these ideas won’t amount to much, and certainly aren’t equal to the problem of joblessness across the nation. The Georgia Work$ program, at least, is a new idea, to give the administration some credit. But it’s not necessarily a good one.
The idea behind Georgia Work$ is that by paying people to train for new jobs instead of for being unemployed, the government can remove the disincentives to finding a new job inherent to unemployment. Not only does that spur people to get back to work, but it also saves the government money it would have spent on extra weeks of unemployment benefits for those people. The Georgia government does report saving some funds with the program.
It might not transition well to the federal level, though, for a number of reasons. First, according to the Journal article, only about 6,000 workers have been hired by the companies they were placed with by Georgia Work$. Given that there are almost half a million unemployed people in Georgia and about 14 million unemployed Americans overall, it’s clear that this plan wouldn’t come close to addressing the country’s larger economic problems. Furthermore, Georgia Work$ seems to be exactly the kind of program that would benefit from a federalist approach — letting other states adopt Georgia’s model and tinker with it to find better approaches. That process seems to be already happening, with a number of other states trying to copy Georgia Work$. Why get the federal government involved?
As for infrastructure spending and tax incentives for hiring: the 2009 stimulus bill demonstrated, famously, that infrastructure spending isn’t a short-term solution for unemployment (i.e., “shovel-ready wasn’t as shovel-ready as we expected). If there are infrastructure projects worthwhile for their own value, then by all means pay for them, but otherwise there’s no point. Also, the Obama folks have already tried a number of tax credits for small business to incentivize hiring with only limited success.